By Natalie Lord
Bitcoin started the cryptocurrency race in 2009 and since then more than 2000 cryptocurrencies have become available, according to CryptoCompare. A decade on, however, cryptocurrencies have yet to be adopted by the mass market and continue to face various challenges. That said, there’s a lot of momentum building in the crypto space, and 2019 could herald the start of a new era for cryptocurrencies.
After hitting a peak in December 2017 when Bitcoin reached US$20,000, cryptocurrencies have plummeted in their worth, troubled by scepticism, failed ICOs and abandoned projects. But recently there has been much change and cryptocurrencies have taken a turn for the better. Bitcoin is on the rise, and many financial analysts are predicting that cryptocurrency prices will soar due to a number of reasons.
The new Bakkt Exchange, from the New York Stock Exchange parent company, ICE (Intercontinental Exchange) is likely to result in a fresh injection of institutional investment, which could catapult cryptocurrencies and increase confidence in the space. Its launch, later this year, with Microsoft and Starbucks is sure to incentivise mass adoption.
Elsewhere, the Nasdaq Stock Exchange and Germany’s second-largest exchange, Boerse Stuttgart, will begin to offer crypto-related products and trading platforms.
US-company Fidelity has 25 million customers and has announced it will be entering the space. The same is true of TD Ameritrade which has 11 million clients. To date there are only five million active Bitcoin wallets in existence. Imagine what an additional customer base of 36 million from two of the world’s largest institutions will do.
Another lure for crypto investors will be an Exchange Traded Fund (ETF). An ETF is a type of investment fund that is tied to the price of an underlying asset, like an index fund, is traded on exchanges and available to both retail and institutional investors.
If listed on a regulated US Exchange, an ETF would allow large institutional investor the opportunity to get involved in the cryptocurrency industry and result in broader recognition and acceptance by Wall Street.
There have been many attempts to launch such a product, but no one has yet been successful and secured approval. The well-known Winklevoss twins were amongst others to fail because the SEC argued that it wasn’t safe enough for investors. Most recently the SEC postponed a decision of the VanEck/Solidx ETF proposal on the Chicago Board Options Exchange (CBOE).
Education in the space is another reason that limits widespread adoption. But increasing efforts have been made of late to make crypto education and understanding more accessible. New York University has introduced a graduate level certification in digital currencies, and last year the London School of Economics launched an online course titled: Cryptocurrency Investment and Disruption.” Amongst others, Cambridge University, Stanford, Wharton, Georgetown and NYU also offer crypto courses.
There’s change in the air and strength building in the crypto arena. As the year progresses the industry is set for certain change and greater visibility. Next week we explore further trends in the space and identify what you should be looking out for.